AUTO COMPANIES tend to buy back their distribution rights when sales improve, but the arrival in Europe of new automakers like Proton keeps the independents alive.
The price of using a distributor is loss of control.
In recent years, manufacturers have become control freaks. They want to know who is buying their cars, and why, and they want the profits that come from the wholesaling level.
Manufacturers new to Europe, like the Japanese, Koreans and Chrysler, tend to begin with independent distributors. That keeps overheads low and buys some expertise.
As sales grow, so does interest in control.
Chrysler has bought its distributors in France, Italy and Germany, and the contract with its UK distributor runs out next year.
Saab Automobile has bought all remaining shares in Scancars AG, its import agent in Switzerland since 1980, which sold 1,800 cars in 1996. The company will change its name to Saab Automobile Schweiz AG.
'The competition in the Swiss market is very tough,' said Robert Collier, market area director at Saab, 'and the customers are demanding.'
Toyota only owns a minority of its distributor in France, where it has announced a new factory. Toyota took 10 years to buy control of its Toyota GB distributor from Inchcape. Control passed hands in a friendly way on 1 January.
Other buyouts were less friendly. Nissan's attempts to reclaim its UK distribution from importer Octav Botnar in the early 1990s turned into a messy dispute involving the dismissal of the distributor.
At the time, Botnar had around 6 percent of the UK market for Nissan. He controlled the bulk of the UK dealer network through AFG, a sister company. When Nissan regained control of the network, it had to start from scratch, and has struggled to reach its former market share.
Sometimes the transition is easy. When Proton Cars GB founder and major shareholder David Brown died, the Malaysian automaker bought up its rights. However, Proton has said it might consider selling the concession back to an independent.
Hyundai switched from one distributor to another in the UK.
It has been using IM Group, which also distributes Ssangyong, Subaru and Isuzu. In 1993 it began moving to Lex group, a year after Lex sold the Volvo concession back to Volvo. Lex last month bought out IM's remaining 49 percent stake in Hyundai Cars GB for £20 million ($34 million).
Lex spokesman Steve Kitson said the company was in the distribution game for the long haul - perhaps up to 20 years. 'We have a rolling three-year contract and we would like to negotiate a longer agreement. We never say never, but Lex does not expect Hyundai to try to take the concession back. Rather, Hyundai prefers to use local expertise in local markets.'
When Daewoo began setting up its networks in Europe, its UK experiment attracted much attention.
Daewoo decided to distribute itself from the outset, but without the expense of a traditional dealer network. So far, it has not been copied. Even Daewoo uses distributors in smaller European markets such as Portugal.
The most active buyer of distributors in recent years has been Chrysler. Last month, the European Union gave its approval to Chrysler's acquisition of Loewman Group, the carmaker's distributor in Belgium, Germany and the Netherlands.
In a recent interview, Chrysler Chairman Robert Eaton explained his company's rationale.
'This will bring us much closer to the customer by removing a level of the sales system,' he said. 'We can also reduce costs and improve our competitive position.'
Chrysler expects significant savings from having warranty administration and parts distribution handled on a pan-European basis. Chrysler's is a global view. It also recently purchased its distribution in Brazil and Japan.
Distributors must walk a fine line. If they don't sell enough cars, they risk losing the concession. Sell too many, and the manufacturer will want to buy the concession.
'I think we're too small right now for Daihatsu to be interested in owning us,' said Simon Small, spokesman for Inchcape-controlled Daihatsu UK. 'But if we got bigger, things might change.'